RATIONALE: Vaccines made from a person's melanoma cells may make the body build an immune response to kill tumor cells. Interferon alfa may interfere with the growth of the cancer cells.

PURPOSE: Randomized phase III trial to compare the effectiveness of melanoma vaccine with that of interferon alfa-2b in treating patients who have stage III melanoma that has spread to regional lymph nodes following surgery.

OBJECTIVES: I. Compare the relapse-free and overall survival rates in patients with stage III melanoma treated with autologous tumor vaccine versus interferon alfa-2b as postsurgical adjuvant therapy. II. Compare the safety and tolerability of these regimens in this patient population.

OUTLINE: This is a randomized, open-label, multicenter study. Patients are stratified according to number of metastatic lymph node sites (1 vs more than 1), number of positive lymph nodes in a single site (none vs 1 or more), presence of intransit metastases (yes vs no), and evidence of extranodal extension (yes vs no). Patients are randomized to one of two treatment arms. Arm I: Patients receive autologous tumor cell vaccine intradermally once a week for 7 weeks followed by a booster injection at 6 months. BCG is given concurrently with vaccine as an immune-stimulator for doses 2-8. Patients also receive cyclophosphamide 6 days after the first vaccine injection. Arm II: Patients receive interferon alfa-2b IV for 5 consecutive days a week for 4 weeks followed by maintenance doses given subcutaneously 3 times a week for 48 weeks. Patients are followed monthly for 1 year, every 2 months for 1 year, every 3 months for 1 year, and then every 6 months for 2 years.

PROJECTED ACCRUAL: A total of 386-425 patients will be accrued for this study.

• Biological: BCG vaccine
• Biological: autologous tumor cell vaccine
• Biological: recombinant interferon alfa
• Drug: chemotherapy
• Drug: cyclophosphamide

DISEASE CHARACTERISTICS: Histologically confirmed melanoma metastatic to regional lymph nodes with a clinically palpable mass Must have clinical evidence of the following: Metastases in 1 nodal site All other nodes microscopically negative No intransit metastases No extranodal extension OR Metastases in more than 1 nodal site More than 1 positive lymph node in a single site Intransit metastases Extranodal extension Must have undergone complete resection of tumor, measuring at least 2 cm in diameter, within the past 6 weeks No distant metastases

PATIENT CHARACTERISTICS: Age: 18 and over Performance status: Karnofsky 80-100% Life expectancy: At least 6 months Hematopoietic: Hematocrit at least 30% WBC at least 3,000/mm3 Hepatic: Hepatitis B and C negative Renal: Not specified Other: Not pregnant or nursing No active serious infection No active autoimmune disease HIV negative No other malignancy within the last 5 years except squamous cell carcinoma of the skin, carcinoma in situ of the cervix, superficial bladder carcinoma, early stage prostate cancer, or noninvasive melanoma No active severe depression or psychiatric disorder with psychotic symptoms No uncontrolled thyroid abnormalities

PRIOR CONCURRENT THERAPY: Biologic therapy: Not specified Chemotherapy: At least 6 weeks since prior cytotoxic drugs (except for isolated limb perfusion) Endocrine therapy: No concurrent systemic corticosteroids Radiotherapy: At least 6 months since prior radiotherapy Surgery: See Disease Characteristics Other: At least 30 days since prior investigational drugs